Accidental death is the third leading cause of death in the usa after heart disease and cancer, according to the Cdc. Performs this mean you should think about an accidental death insurance plan rather than a more traditional term life insurance policy? Certainly not.
While many people like the idea of only paying for accidental death coverage – especially young adults, who might assume the biggest risk for their lives is an unexpected, fatal accident – the fact is that accidental insurance only provides limited coverage, particularly when when compared with term life insurance.
The biggest drawback to an accidental / accident death policy is it leaves you exposed to a significantly higher chance that the loved ones do not possess claims. As the CDC reports, only 6% of all deaths in the U.S. are from accidental causes. If you pass away from the cause in the other 94 percent? Your accidental death insurance policy won't benefit your loved ones.
Here's what you ought to know about accidental death insurance, in addition to when you should consider an accidental / accident death policy versus a phrase life insurance policy.
Accidental death insurance versus life insurance
Accidental death insurance, also referred to as accidental / accident death and dismemberment or AD&D insurance, is an alternative to term life insurance. As the name suggests, accidental / accident death insurance is designed to protect your beneficiaries should you die accidentally – from a car crash, for example, or a workplace injury. If your policy includes dismemberment coverage, this may also provide some type of living benefit if you are severely injured, paralyzed or loses a limb. Death from illness or natural causes is not covered under accidental / accident death insurance, and lots of accidental / accident death policies are generally limited to some up to $500,000.
Term life insurance coverage, however, protects your loved ones if you die inside the coverage term – generally 10, 15, 20 or 3 decades. Your beneficiaries will get their death benefit whether your death may be the result of any sort of accident, a disease or natural causes, unlike accidental / accident death insurance. Plus, term life is not typically capped at $500,000 in coverage benefits.
Cost of accidental / accident death insurance versus term life insurance
Both accidental death insurance and term life insurance are affordable, especially when when compared with permanent life insurance, and lots of insurance companies and brokers offer both life insurance coverage and accidental death insurance.
However, the 2 types of policies don't provide the same coverage – so you've to decide just how much protection you want for the price you're paying.
Let's do some cost-and-benefit comparisons:
Term life insurance
Two common types of term life are medically underwritten life insurance coverage and simplified issue life insurance.
Medically underwritten term life insurance
Medically underwritten term life insurance policies are usually the least expensive type of coverage. These policies take into consideration how old you are, lifestyle choices, and personal and family health history to find out eligibility and pricing that's personalized for you. Medically underwritten coverage also offers probably the most robust selection of coverage options, from tens of thousands of dollars to many million.
Thanks to innovations in underwriting, some medically underwritten policies – such as the Haven Term policy – can be purchased with no medical exam for any subset of applicants that qualify to skip it. When a customer submits an application, they will be instantly notified as to whether they qualify to skip the health check or not. Keep in mind that it certainly is very important to be truthful in the application. The issuance of the policy or payment of advantages may depend upon the answers you give within the application as well as your truthfulness.
Medically underwritten term life is generally pretty affordable. Here are some examples from the price of coverage for nonsmokers in good and excellent health for any Haven Term policy, issued by MassMutual.
Get a quote for medically underwritten term life insurance.
Simplified issue life insurance
Simplified issue policies typically require applicants to complete a short questionnaire within the underwriting process, with a few health-related questions. No medical exam is needed to apply and get a coverage decision.
Because no medical underwriting is carried out and since the insurer knows less in regards to you, these coverage is usually more expensive than the usual medically underwritten policy. Why? Generally, the more an insurer understands in regards to you, the more affordable coverage may be.
Additionally, with simplified issue policies, maximum coverage amounts are often restricted to $500,000 or less. For example of the cost of coverage for a Haven Term Simplified policy, issued by C.M. Life Insurance Co., a MassMutual subsidiary. Quotes shown are for nonsmokers.
Get an estimate for simplified issue life insurance.
Accidental death insurance
Prices of accidental / accident death insurance are similar to medically underwritten life insurance coverage for the similar term length. For instance, a 30-year-old woman in excellent health could buy a $500,000, 30-year accidental / accident death policy starting at $30 per month, according to insurance broker Fabric, while that same woman can purchase a $500,000, 30-year Haven Term policy starting at $30 per month. If she died accidentally while her coverage period for accidental death insurance was active, her beneficiaries would receive a death benefit. However, if she passed away from a disease or health issue, the accidental death benefit wouldn't be paid out to her beneficiaries. With a term life policy, her beneficiaries receive a death benefit whether her death is the consequence of an accident, an illness or natural causes.
What does accidental / accident death insurance cover?
Accidental death insurance generally covers loss of life resulting from accidents involving cars, bikes, work-related machinery, falls, suffocation, choking, drowning, and fires.
Some accidental policies also cover dismemberment, which means you or your beneficiaries can receive a payout for loss of sight, speech, hearing, or a limb. (This is not the same thing like a disability income insurance policy, which is made to replace a portion of the income if you become unable to work for an extended time period.)
Accidental death and dismemberment policies generally do not cover fatal accidents brought on by surgery, mental or physical illness.
When is accidental / accident death insurance the best choice?
Accidental death insurance is simple to purchase because it doesn't require any medical underwriting. An accidental death policy may be a better fit than term life if you have been declined life insurance because of health reasons. Cost-conscious consumers may also prefer the generally lower premiums and face amounts of accidental death insurance compared to term life, despite the fact that accidental / accident death policies will only shell out after any sort of accident.
The best thing you can do when deciding if AD&D may be the right choice is to check the cost with term life. Make sure you understand how much coverage you're getting, how much you're spending money on that coverage, when the coverage ends and what exclusions have been in the insurance policy.
Doing so will help ensure you're obtaining the cost effective for you – and, more to the point, your family.
How does term life insurance work?
Term life insurance coverage provides life insurance coverage throughout a specific term length. In most cases, people choose their term length to match the period of your time in which themselves are financially dependent on their income or labor – until the policyholder reaches retirement age, for instance, or until their children develop. 10-year, 15-year, 20-year and 30-year terms are all popular.
With term life, you're covered regardless of whether your death is caused by accident, illness or other ailment. Should there be exclusions that might stop your beneficiaries from receiving their death benefits, they can be limited to suicide inside the first couple of years or intentionally not disclosing material information within the application process.
For lots of people, medically underwritten term life insurance is a good value. Premiums are usually affordable, and you have coverage during the years your loved ones needs it most – until your mortgage is paid off, your partner or domestic partner is retired, or perhaps your financially dependent youngsters are on their own.
It's also very simple to make an application for term life insurance online. Buying quality term life is becoming easier recently thanks to modern technology. You are able to apply online for any Haven Term policy and receive an instant decision on coverage eligibility. If a health check is needed, you'll be notified at that moment; with Haven Life, you'll have 3 months to take it. There is no reason to fear the medical exam, either – when an exam is needed, most Haven Life customers think it is to become a simple process.
If you're interested in a no-medical exam life insurance coverage, Haven Life Simplified may well be a good choice for you personally. Simplified issue life insurance coverage generally costs more than medically underwritten life insurance, but it can be a wise decision for people who don't want to take a medical exam. (Having said that, our legal team want to remind you that issuing any term life insurance policy or paying its benefits is determined by your insurability, based on your answers towards the health questions in the application, and your truthfulness.)
Find the best choice for you as well as your loved ones
You shouldn't buy any kind of insurance policy before you understand what kind of coverage it offers – and in many cases, accidental / accident death insurance won't provide enough coverage to satisfy your needs.
Accidental death insurance could be a good option if you are not able to be eligible for a medical underwriting under a life insurance coverage. It could also be a good option if it is the only real life insurance coverage you can afford. However, if you're healthy and have an uncomplicated medical history, then you will usually get a less expensive with a medically underwritten term life insurance policy.
Life insurance is valuable for your family and something of the most thoughtful gifts you can provide your loved ones. For most people, term life is the perfect option than accidental / accident death insurance. An affordable term life insurance policy can help financially protect both you and your loved ones, regardless of how you pass away.